The Department of Labor (DOL) issued final regulations (Final Regulations) regarding the timing and order of qualified domestic relations orders (QDROs) on June 10, 2010. The Pension Protection Act of 2006 (PPA) required the DOL to clarify certain issues relating to the timing and order of domestic relations orders under ERISA. The DOL released an interim rule (Interim Rule) in March 2007, and these recently released Final Regulations finalize the Interim Rule with few changes. The Final Regulations are effective as of August 9, 2010.
First, the Final Regulations state that a domestic relations order otherwise meeting ERISA's requirements to be a QDRO will not fail to be treated as a QDRO solely because the order is issued after, or revises, another domestic relations order or QDRO.
Next, the Final Regulations clarify that a domestic relations order otherwise meeting ERISA's requirements to be a QDRO will not fail to be treated as a QDRO solely because of when it is issued. The Final Regulations provide several examples commonly faced by plan administrators, illustrating that a domestic relations order will not fail to be a QDRO solely because it is issued after:
- the participant's death;
- the parties' divorce; or
- the participant's annuity starting date.
Lastly, the Final Regulations add a new example illustrating a situation in which a domestic relations order issued after an annuity starting date attempts to eliminate the straight life annuity based on the participant's life, and instead provide the former spouse the right to receive all future benefits in the form of a straight life annuity based on his or her own life expectancy. As is the case for most plans, the example assumes that the plan does not allow reannuitization with a new starting date. The order does not fail to be a QDRO solely because it is issued after the annuity starting date, but it does fail because it requires the plan to provide a type or form of benefit not otherwise provided under the plan.
The Final Regulations provide clarification that will be helpful for plan administrators tasked with qualifying domestic relations orders received by their plan. Plan Administrators also should review their current QDRO procedures to make sure that they are consistent with the Final Regulations.
The text of the Final Regulations may be found here.